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Franchise Opportunities

Peering into the past, franchise opportunities may have been offered to eager entrepreneurs as early as in the 1930’s. Fast food franchises came on full steam in the 50’s with Kentucky Fried Chicken, McDonald’s and Burger King.

Today, franchise opportunities are reaching 1 Billion outlets in number in the US, with nearly a $1 Trillion in output to the US economy. Here is an interesting look at franchise opportunities then and now, courtesy of sonus.com. Check out the top franchise opportunities for 2012.

Construction Spending

Construction spending has one of the biggest impacts on economic indicators, as the construction industry is huge. Construction spending gives us a picture of how well the construction industry is doing in the economy. Construction, as a major employer is tied to employment and to the housing industry statistics. The value of construction includes key cost categories such as labor, materials, professional services, and overhead costs.

The following graph from the US Census Bureau shows the trend in construction spending. The data report indicates that in February 2012, construction spending was at almost $809 Billion, +5.8% increase over February 2011 data. This represented a $45 Billion increase in construction spending year over year. Private construction spending accounted for almost a $49 Billion net increase, while public construction spending dropped by nearly $4 Billion.

Overall, the construction industry is on the road to recovery it seems, but still not near the highs of over $1.2 Trillion in construction spending back in 2006.

Tax deadlines are close approaching, and as you are preparing to send in your hard earning money to pay your taxes, here is a brilliantly crafted infographic, courtesy of H&R Block, on income tax system statistics.

Some highlights of the tax system:

35% – Average income tax rate in the US (20% higher than Hong Kong’s rate)

26.3% of every tax dollar is spent on the military, 24.3% on health care, & 21.9% on education

7.4% of every tax dollar is spent on debt interest ($472 Billion in 2013 alone)

Average refund expected to be over $2,900 (meaning an average of $2,900 was over-paid)

In these economic harsh times and with debt accumulated from economic action plan spending, debt interest portions are sure to increase. A balance should be struck to ensure future generations are not enslaved to pay the interest and deprive citizens of much needed social services. Imagine what $472 Billion could pay for in 2013 instead of debt payments. How much will this impact you?

The price of crude oil, and consequently the price of everything, is rapidly increasing. This infographic, courtesy of fuelfreedom.org highlights the impacts of oil prices.

Some fact and impacts of oil prices:

10 out of the last 11 recessions occurred after an increase spike in oil prices

$330 Billion – US net outflow for foreign oil

Economists projecting 2012 to have the highest gas prices in history

Estimation of up to $200 per barrel of oil if Iran relationship worsens

Highest impacts would occur to lower – middle income earning families

Time for increased emphasis on alternative energy sources and technologies? You bet. Tough economic times an challenges such as these open the doors further to business opportunities around alternatives and green clean energy.

US Economic Indicators

As an entrepreneur, review and keep track of US economic indicators and trends. With the latest report on US Job Recovery in February, many indicators are looking positive. A recent Bloomberg report cites positive trends in indicators such as the Gross Domestic Product, consumer confidence, the housing industry and interest rate figures.

Economic Indicators – Gross Domestic Product

The Gross Domestic Product (GDP) is the indicator of the market value of goods and services produced in the country through a specific period. The sources in the Bloomberg report estimate that GDP will grow by 2.2% for 2012 in the US, up from 1.7% in 2011. Good potential news in the country as recent manufacturing reports have been favorable. Also an emphasis on “Made in the US” strategy will help boost GDP as the focus may be away from many foreign manufactured or supplied goods.

Economic Indicators – Consumer Confidence

Consumer confidence is the measurement of how positive, how comfortable the consumer is with the economy and their own personal finances. It is usually tied to growth in consumer spending in the economy. Business Week reported a rise in consumer confidence to a four-year high, and further stated a Bloomberg Consumer Comfort index rising. Improved industry sectors and employment may be the reasons behind a recent rise in consumer confidence.

Economic Indicators – Housing Industry

A Washington Post article is one of those reports pointing to positive trends, showing the housing market stabilizing and in some sectors, housing sales improving. With improvement in the housing industry, many other indicators such as employment, retail and material sales could improve. However, in a fragile economy many of these industries are linked, and so is growth. Factors such as the increasing fuel could have a negative impact on these recent housing market improvements.

Economic Indicators – Interest Rates

The Bloomberg report sources indicate that interest rates will remain steady and low over the next two years. This is potentially good news for entrepreneurs who will be looking to start-up new ventures and need commercial loans. This is also favorable news for existing businesses looking to expand and in need of additional funds. Within your financing mix, commercial loans take up the majority percentage of all financing. The low rates will help lower the overall cost of borrowing.

As an entrepreneur or business owner, carefully watch and review economic indicators and trends, as those indicators most likely signal potential impacts on your business and position in the economy.

In the normal context of the business life cycle, a business, product, service or idea will progress through development, growth, peak and decline phases.

This cycle normally repeats over and over again as businesses usually adapt and change with the environment, close to the peak or into the decline phases. The resulting graph of a fairly healthy, adjusted business looks like waves increasing in height from left to right on the graph.

Current Business & Economic Climate

In addition to the phases of the normal business life cycle, other factors such as economic or global issues can alter the business life cycle. In the current economic climate over the past couple of years, those business cycles have either peaked or declined earlier than projected. In a recessionary period, many business cycles may be on the declining side, but as economies pull out a recession, cycles hit a low stabilization period and another growth period begins. Many businesses in 2012 are coming off the declining phase, reaching a low and are starting on the growth incline again. Some stock graphs sometimes mimic the business cycles of many corporations.

Business Cycle – Development Phase

This phase is the stomping ground for new product and business development. It is the research and development phase behind ventures, with heavy emphasis on planning, testing and piloting projects. In a repeating cycle this is a period of stabilization (as indicated by the trough on the graph), as companies have adjusted from declining phases and have stabilized operations and finances from a potential loss period.

Business Cycle – Growth Phase

Following the development or stabilization period, companies and businesses enter a growth period, where new revenues grow from new products & services, or improvements made in operations. The growth, inclined phase indicated on the graph could be a result of efficiencies made in operations, to make businesses more competitive.

Business Cycle – Peak Phase

As products, services, ideas, and business reach maturity, they hit a peak phase where no further growth occurs. Peak phase may indicate no further revenue can be generated from products, or that the business has reached its maximum market penetration, or that the business may have reached maximum consumer interest. If you are keeping accurate, timely track of your finances and analyzing your trends, this would indicate that you may have to start making adjustments in business.

Business Cycle – Decline Phase

Many economists and business professionals have stated that the current global economic circumstances may have caused companies to enter the decline phase faster than projected. In the normal business cycle, if adjustments to business are not made, companies, products and ideas usually enter a deep decline period. The current economic climate may have accelerated that, but many statistics are indicating that the economies are turning around.

Business Cycles Repeat and Return to the Positive

As noted in the cycle, declining phases cause reactionary measures to once again achieve a period of stability. Following stable periods comes growth phases and the business cycle repeats on and on.

Business Tips for the Business Cycle

Be aware of where your company, product, service or idea is within the business life cycle

Keep track of your finances and operations and watch for trends as these trends are your indicators.

Be pro-active rather than reactive; being pro-active to trends may help you recover easier and faster from declining phases

Be cognizant of the business and economic climates locally, nationally and on a global basis

Spring and the growing season will soon be upon us. Many will flock to garden and flower centers to spend on gardening necessities to either spruce up your property or get a jump on planting those vegetable and fruit gardens. It is big business and entrepreneurial opportunities are plentiful if you know the gardening industry, conduct your own research, and find your niche.

Gardening Industry Statistics

According to First Research, the US garden center and farm supply industry is a $30 Billion, 16,000 establishment industry. Those 16,000 businesses generate much employment for the US, with the US Census Bureau estimating well over 350,000 employees, with total payroll salaries exceeding $10 Billion.

In Canada the statistics are proportionate as well, with the industry approaching $3 Billion in revenue annually, with relatively similar levels of employment and salaries.

Gardening Industry Challenges

Most research firms have identified key industry challenges including competition across the industry, changing regulations with products, and economic ties to the housing market. Consumers are also very cautious with expenditures, such as outdoor plant and landscape product spending, that would tend to be on the discretionary expenditure side. However, where there are challenges, opportunities open up and exist for new entrants in niche areas.

Green Gardening Industry Opportunities

Along with the sale of normal bedding and landscaping plants, garden and nursery centers are expanding to offer new breeds of tropical plants that can withstand some North American climates. Genetics plays a role in some of these new strains of plants.

Garden centers have also diversified their product lines to add in different decorative garden supplies and new composite concrete products for landscaping. Product offerings extend into the indoor plant and decorative arena, as these sales help offset the off-season, low sales period of outdoor plant and garden sales.

Opportunities and Growth in Niche Green Gardening

Another gardening industry area that is experiencing growth is in green gardening, environmental gardening, with use of safe products and growing interest in organic gardening. Growth in organic green gardening is estimated to be in the range of 5-10% annually. One of the most relevant reasons is the changing consumer attitude and landscape towards the use of herbicides and pesticides. Organic green gardening is completely void of the use of any herbicide or pesticide. Not good for herbicide or pesticide suppliers, but excellent for garden centers who promote, sell and are specialists in organic gardening products and techniques.

If you are an entrepreneur searching for opportunities in the gardening and garden center industry, as always, conduct your own due diligence and plan well. Although challenges exist, so do opportunities, especially in niche areas. Adequate research and business planning will be required.